LESSON 2: ENTERPRISE DEVELOPMENT

Objectives:

At the end of the lesson, you will be able to:

a. define programs, policies, enterprise and enterprise development

b. determine the types of enterprise
c. determine the stages of enterprise development
d. describe business process and its importance

PROGRAMS AND POLICIES ON ENTERPRISE DEVELOPMENT

 Programs are short-term interventions that create temporary improvements in the wake of challenges.
 Policies are covenants we collectively choose to live by, as articulated in legislation and regulation. They inform our socially accepted mores and
ethics.
 An Enterprise is a business organization that is formed and which provides goods and services, creates jobs, contributes to national income,
imports, exports, and above all, sustainable economic development. In a more concise or synthetic way, is a business venture. Entrepreneur is
nothing else than the person starts an enterprise. Entrepreneurship is the creation or extraction of value. It is viewed as change which may
include other values than simply economic ones.

Enterprise: Meaning, Purposes, Types

 Specifically, an enterprise is a profit-oriented business or company. Some may strike a balance between profits, social and environmental,
as social enterprises do. 
 Enterprise can refer to a small, unincorporated business such as a sole proprietorship. Or, often, we also identify with large companies with
many employees.
 Then, we also use it to refer to state-owned enterprises, a company controlled and owned by the government.

What are the goals of the enterprise?

Enterprises operate to make a profit by producing goods or providing services. Then, they sell it to consumers to satisfy their needs and wants.
Consumers can come from households, businesses, or other organizations. Others balance profit, social and environmental. They do not pursue
maximum profit to create shareholder (owner) value. However, they maximize their social and environmental impact through the profits they make.
Thus, they are a social enterprise.

Who started the enterprise?

Individuals who do so are called entrepreneurs. They turn an idea into a business. They plan, start, and run businesses to make a profit. So, they can
earn money and accumulate wealth by commercializing their ideas. However, on the other side, they also have to bear the associated risks.

To do it all, entrepreneurs pool resources: labor, capital, and raw materials. Then, they organize these resources to produce goods and services. Then,
they also usually divide operations into functional areas such as marketing, production, human resources, and accounting and finance.

Entrepreneur business ideas

Entrepreneurs love imagination to seek out business opportunities. They like to try new things and often see problems from a different perspective.
They see the problem as an opportunity, which might be commercialized. Entrepreneurs’ business ideas can appear in their daily lives. Whether it’s
when they interact with co-workers, with family, while using a product, or even by chance. Entrepreneurs often challenge the status quo and see
problems as opportunities to find solutions. For example, they ask, what are the solutions to make our lives easier? What can be improved from an
existing product?

Take Facebook, for example. Mark Zuckerberg’s idea to found Facebook emerged from Harvard University’s “Face Book,” a student directory
featuring photos and personal information. And, it’s just a paper version. But, he saw that it had problems because it was difficult to collect student
data considering many students. So, the question arises, “Why not build it online, so everyone contributes by sending photos and personal
information.” Creative thinking is the key. This allows entrepreneurs to come up with new ideas or approaches. Or, they adopt a business idea or
concept in another country and adapt it to their own country. Many people think creatively and come up with new ideas. However, not many can
commercialize it into a new product. And entrepreneurs are one step ahead because they can do it. They made it happen by setting up a business.

New ideas are often easy to duplicate, especially when they have excellent growth potential. Therefore, entrepreneurs try to protect their business
ideas legally. They patent their new invention, innovation, or process. When others copy it, they can claim compensation through patent, copyright,
or trademark protection.

Back again to the subheading, where does the entrepreneur’s business idea come from? It can come from:

 Everyday coincidence
 Personal experience and others
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  Hobby or skill
 Small budget research
 Reading or attending events
 Brainstorming
 Previous work experience
 Absorb ideas from others
 Watching the trend

Entrepreneur characters

 Entrepreneurs make money by building businesses. However, they also know the consequences; money does not come without risk.
Therefore, to earn money, they are also willing to take risks.
 Even though they have researched the market carefully and found a business opportunity, the risk remains. For example, they may fail to
raise sufficient capital to fund the business. In other cases, customers may not choose to buy their product because it is relatively expensive.
Both cases can lead to failure and loss.
 Some people like to take risks. Others weigh too much and calculate between risks and return without taking further action.
 Entrepreneurs have a strong drive to realize the ideas and opportunities they find. In addition, they have the determination and energy to
overcome obstacles in launching a new business.
 Individual qualities distinguish successful entrepreneurs from ordinary people. It includes the following eight entrepreneur characters:

1. Creative thinking by seeing problems as opportunities and likes to challenge the status quo
2. Confident and have no doubts about the efforts they put in
3. Unwavering spirit, motivated, and eager to achieve goals
4. Self-disciplined and sticking to what they started
5. The ability to manage risk and take risks only when the rewards are worth it
6. Open-minded to bring more insight and perspective to them
7. Persistence and when they fall, they get up again
8. Clear direction on how to make their business idea a success

What is an Enterprise?
Enterprise refers to a for-profit business started and run by an entrepreneur. And we will often say that people running such businesses are
enterprising. The roots of the word lie in the French word entreprendre (from prendre), meaning ‘to undertake’, which in turn comes from the Latin
“inter prehendere” (seize with the hand). 

Entrepreneurs usually start an enterprise – with the associated risks – to make a profit, and for one of several reasons:

 Problem-solving. They see a particular issue that they feel they can solve. 
 Exploit ideas. They have a new idea or product they believe will be successful. 
 Filling a gap. They see a gap in the market they believe they can fill.
 Competitive pricing. They believe they can produce something on the market cheaper and offer it at a lower price. 
 Knowledge-based. Where they believe they can supply specialist knowledge that customers will pay for.

What are the types of enterprises?

The types of the enterprise depend on what variables we use. It will usually also vary between countries or institutions. Say, we use the  business
size to differentiate them, specifically the number of employees. The OECD divides them into four:

 Micro: less than 10 employees

 Small: 10-49 employees

 Medium: 50-249 employees

 Large: more than 250 employees

Next, we might distinguish between them based on their legal status: incorporated and unincorporated businesses.

Alternatively, we distinguish them based on their legal structure within a particular jurisdiction. It can be:

 Sole proprietorship

 Partnership

 Private limited company

 Public limited company

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Sole proprietorship

 A sole proprietorship refers to a business structure owned and operated by an individual. It does not result in a separate entity. So, the
assets and liabilities of the business are entirely in your hands as the owner.
 You are fully responsible for the operation and success of the business. You have unlimited liability for any business risks. So, you may
have to sell personal assets to pay off company debt.
 But, if your business is successful, the profit of the business is entirely yours. You do not have to share it with others as in a partnership or
only get a portion (dividends) as in a limited company.

Partnership

 The ownership of the business is under two or more parties (partners). They work together to form and run a business. Each partner
contributes differently depending on the agreement.
 Unlike sole proprietorships, partnerships allow for the pooling of greater resources and capabilities. Each partner can bring certain
resources, including capital and expertise, to lead the business to success.
 In addition, business risk is also spread among partners. Likewise, profits must also be shared between them, the proportion depending on
the partnership deed.

Private limited company

 A private limited company implies a separate business organization from the owners (shareholders). It is an incorporated business, unlike
sole proprietorships and partnerships.

 The owner assumes limited liability and is not personally liable for the financial and legal obligations of the business. So, when businesses
have difficulty paying debts, they don’t have to pay off using their personal money. And, if the company closes, they only lose some of the
money they invested in the company.

 The owner does not operate the business directly. Instead, they appoint a board of directors to run the business, expecting the directors to
act in their best interests.
 Then, the owner is entitled to the company’s profits, but maybe not entirely. For example, companies may only distribute a certain
percentage of profits as dividends to them. And, sometimes, companies don’t pay dividends at all, usually because they need an increase in
internal capital.

Public limited company

 A public limited company has similar characteristics to a private limited company. The difference between the two lies only in whether the
company’s shares are available to the public for trading or not.

 Public limited companies list their shares on the stock exchange. So, people can trade it. In contrast, private limited companies do not.

 Then, shareholders in a public limited company have the potential to get dividends and capital gains. When the company’s stock price rises,
they can sell it and realize a profit.

 Next, public limited companies are usually more transparent because they are bound by regulations. For example, they must regularly
publish their financial statements.

ENTERPRISE DEVELOPMENT

Enterprise development is the deliberate and planned growth of a business by creating increased value for customers in its offering of products and
services.

Enterprise Development Definitions

“Enterprise Development is the process of increasing the capacity of individuals, families, groups and organizations to supply useful goods and
services profitably to the market.  It supports the development of essential business skills, enabling individuals to adapt to changing market
conditions, and maintain business growth.  Support may be directed at improving services for entrepreneurs, such as savings and credit; management
training; marketing linkages; and technology transfer - or improving the policy, regulatory or operating environment that enables business to
thrive” (2000 DFID ).

Sustainable (Values-based) Enterprise Development (SED) is the process of sequential steps within a Balance Growth Strategic framework resulting
in increasing the capacity of individuals, families, groups and organizations to supply useful goods and services profitably to the market within limits

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set by ecology and social values (Scott and Colley, September 2007).    Taking into consideration viabilities at the technical, economic, social and
environmental levels, SED supports:

 Development of essentials skills

 Enabling individuals to adapt  to changing market conditions
 Maintaining business growth
 Improving the services for entrepreneurs such as savings, credit, management training, market linkages, and technology transfer
 Improving the policy , regulatory and operating environment that enable business to thrive
 Establishing sound procedures that result in the utilization of resources without extreme harm to the environment within the local context:
o Sustainable harvest/extraction such that the environment can regenerate itself
o Ensuring biodiversity and species
o Recycling of natural waste from production and processing
o Conservation of soil, water and the air
o Enabling people to make livelihoods from agro-ecological opportunities, such as eco-tourism, permaculture and organic farming
o Promotion of production and use of renewable resources

TURNING A BUSINESS IDEA INTO AN ENTERPRISE

An enterprise and a business are nearly synonymous. Most entrepreneurs know how to find the resources they need to turn an idea into a thriving
enterprise — such as mentors, capital, consultants, market surveys and learning resources. Enterprise development can be broken down into five
stages:

1. Pre-venture stage
2. Startup stage
3. Growth stage
4. Maturity stage
5. Revitalization stage

The types of resources you should be looking at depends on the stage your business is in.

 PRE-VENTURE STAGE. The pre-venture stage is the first stage of any enterprise. You have identified an opportunity, but you don't yet
have a product or service to offer, or your idea is still in development. You don't yet have a supply chain or market outlet, and you have yet
to complete a proof of concept. Planning and research are the main activities at this stage. Here, you write a business plan and start looking
for startup funding.

 START-UP STAGE. The start-up stage begins when you are ready to launch your business. At this point, you are hiring your first
employees, setting up your organizational systems, building a customer base, and working toward a break-even point in your sales. Some
companies can stay in the startup stage for several years, and this stage doesn't come to a close until you have firmly established yourself in
your market. Things that help a business at this stage include mentorship, pilot projects, feasibility studies, marketing and promotion.

 GROWTH STAGE. During the growth stage, an enterprise has passed its break-even point and is expanding its business, both in sales
volume and number of clients. At this stage, you're most likely to be adding new products or services to your offerings and firmly
establishing your brand in the market. During this stage, you should be hiring more employees while investing in infrastructure, including
equipment and machinery as needed to support expansion. At this stage, the business can benefit from strategic planning, access to capital
and adjustments to the organizational structure.

 MATURITY STAGE. A mature enterprise has achieved what most entrepreneurs envision when they see their company at its peak of
success. The company now has a good market share, is making a profit and is sustainable. There is a danger in success, however, in that a
mature business runs the risk of not adapting to changes in the market and failing to expand. Companies at this stage can usually benefit
from quality improvement endeavors and examining new markets. It's also at this stage that an entrepreneur should consider stepping down
and moving on because starting a company is not the same thing as managing a mature company.

 REVITALIZATION STAGE. A mature company reaches a revitalization stage from either internal proactive decisions or from external
decisions that force it to make changes. Often, it is a combination of both. A slump in sales or a new challenger emerging in the market can
inspire a mature business to start revitalizing its business. An enterprise undergoing revitalization can either innovate with new ways of
doing business or diversify by expanding into new markets. Either way, restructuring its organizational hierarchy and bringing in fresh
management are often hallmarks of this stage.

Enterprise Development — the Concept and Functions

Enterprise development is one of the crucial concepts of capitalism and a necessity for those seeking to find success in entrepreneurship. The most
basic yet complete explanation of the concept is about value creation and its increase. Each enterprise sets a goal of scaling and offering more value for
consumers, thus improving its own stature and profitability. Business process management is detrimental to completing that objective.

Efficient Business Management of the Enterprise

One of the critical functions of the concept is an effective adoption of techniques and technologies that allow further improvement of business
management within the company.

Enterprise development starts with top management. Productive communication between stakeholders is critical toward securing better results. This
results in a range of factors that determine the success of the business process.
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  Managing Business Partnerships. Stakeholders focus heavily on obtaining and keeping connections that can be used for scaling and amassing
profits. The more extensive the network of contacts is, the more careful management must take place to gather the maximum out of the
opportunities. Enterprise partnerships are essential when discovering new markets. Befriending local entrepreneurs allows a better understanding
of the market and increases the chances of the successful adaptation of the business to the strategy that provides more value for the given case.
 Managing Project Portfolio. As enterprise scales, it is important to allocate the increased budgets according to the development strategy.
Naturally, more lucrative directions are a priority, while other projects are taken care of as the opportunity arises. Competent enterprise
development requires smart resource distribution and recycling of the profits.
 Managing Company Structure. A healthy enterprise is always built in a way to grant responsibilities to the most skilled individuals and
departments. Governance, team management, project management and more — these are crucial aspects of an efficient structure that is built
from the top of the chain.
 Managing Services. The growth of an enterprise is inevitably connected to an increased range of services provided to add to the value of a
business. Efficient enterprise development system means sustaining already established services and exploring new opportunities at the same
time. This is profoundly connected to financial management and requires in-depth analysis as well as thorough planning, that is a primary
responsibility of the stakeholders and key managers.

Enhancement of Enterprise through Development of Inner Business Processes

Implementing new processes and optimizing the existing ones is another vital function of active enterprise development. The responsibility is shared on
many levels, from CEOs to Project Managers and Team Leaders (if any).

The crucial aspects of this function are as follows:

 Concepts and Vision. Whether it is related to a brand, services or particular projects, the process of defining the concept starts at the top of the
management chain. Once an idea is set and discussed, it goes down the governance pyramid and spreads throughout the enterprise for optimal
reaching of the goal. Requires a high level of management and well-established communication processes.
 Developing Business Processes. The efficient working process requires successful task management and the system of feedback. Polishing the
method of constant communication is detrimental to the success of the enterprise on the inner level.

Business Process: Definition, Importance, and Management

A business process refers to a series of interrelated actions, activities, or work to achieve a business goal. They shape the business operation and,
therefore, must be done.

Companies usually group internal processes into several functional areas or departments. They include:

 Procurement
 Product development
 Production
 Logistics
 Accounting and finance
 Human Resources
 Information and technology
 Marketing
 Customer service

In each functional area, managers actively examine processes to identify and eliminate potential inefficiencies and bottlenecks. It aims to make
business processes more effective and efficient. And, it can involve:

 Fix production system flaws to avoid system failure

 Reduce time to do work and tasks
 Reduce cost and resource consumption
 Improve output quality
 Increase customer and employee satisfaction

Why are business processes important?

Business processes reflect how efficient and effective operations are within a business. That ultimately explains how superior the company is.
Superior business processes can be a valuable capability to support competitive advantage. For example, a well-defined and effective process enables
a company to deliver products on time. It can also eliminate unnecessary costs or activities. And, finally, it makes business processes effective and
efficient along the value chain, enabling companies to create superior value.

What is the difference between business processes, procedures, and functions?

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As defined above, a business process is a series of actions or work to achieve the desired result. Whereas a business procedure is a defined way to
execute a process, usually documented. Procedures detail who does and what must be done in each part of the process. Meanwhile, a  business
function is an organizational unit within a business to carry out business operations. In it, it can involve several business processes and procedures.

Take customer complaint service in the marketing function as an example. It can involve several processes such as establishing and verifying
complaints, identifying solutions and providing solutions to resolving complaints. Who does and what to do when dealing with customer complaints;
it’s all documented in business procedures.

What are some examples of business processes?

Business processes can vary between companies. It depends on the nature of their business. Some may be categorized into the following three
groups:

 Operational process. It relates to the company’s core activities. For example, it could include logistics, production, marketing,
and customer service for a manufacturer.
 Support process. It includes processes in core business support activities. It could include functional areas such as human
resources, accounting, legal, and information technology.
 Management process. It relates to management functions, including measuring, monitoring, and controlling activities. Examples
are the processes involved in strategic planning, governance, and budgeting.

Then, the above categories can cover many activities in functional areas. For example, in production, it could involve processes such as handling raw
materials, converting inputs into outputs in a manufacturing system, checking output quality, and maintaining production machinery.

The following are examples of business processes in the other four functional areas:

 Finance: risk management, financial control, billing, invoice handling, budget monitoring, and financial bookkeeping.
 Marketing: advertising development, product delivery, product development, and marketing research.
 Human resources: recruitment, training, development, and monitoring of staff performance.
 Logistics: planning, organizing, and handling goods (input or output) and related information during shipping and warehouses.

How does the company manage processes within the organization?

Business process management (BPM) is a systematic approach to dealing with business processes within a company. It aims to ensure the process
runs smoothly. Thus, it ultimately supports the established strategy and helps the business achieve its goals.

BPM involves discovering, modeling, analyzing, measuring, improving, and optimizing the processes in which a business operates. Typically,
companies utilize software to monitor and control automated and non-automated business processes. It involves steps such as:

 Design and Modelling

 Execution
 Monitoring
 Optimization
 Reengineering

 Design and modelling. This step maps the workflows and processes within the business. It describes the tasks or jobs, including standard
operating procedures, service level agreements, and task handover mechanisms. Modelling requires real analysis and representation to understand
and describe processes, including clear beginnings and endings, desired outcomes in each process, and sequences of actions and work performed. In
addition, models are important for determining how processes might operate under different circumstances.

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  Execution. This stage is about executing the defined or modeled process. It can involve both manual and automated tasks. Manual
processes are carried out by staff, while automated processes are driven by software. For example, in handling a customer’s order at an online
retailer, the software requests payment and requests a shipping address automatically to the customer before the order is processed. When the money
has come in, the system notifies the staff. Then, the staff packs and ships the item to the customer’s address.

 Monitoring. Monitoring includes tracking every part of the process. So, its actual condition can be monitored. Usually, it is aided by
predefined performance statistics. Take the customer order handling process as an example. Monitoring makes it possible to see when an order is
received by the business, how long it should take, who is handling it, when it should be shipped, and when it should have reached the customer. Such
monitoring allows the business to identify and fix possible problems in each process. In addition, monitoring is also important to find the potential to
save costs or improve process effectiveness.

 Optimization. Optimization involves identifying potential or actual problems in the process and then fixing them. For example, in the
above case, the customer may not have received the goods on time due to a problem in the internal procedures for handling the order. Optimization
checks for such issues or bottlenecks. Then, the team defines the improvements and implements them in the process design. So, the same problem
does not arise in the future. Optimization isn’t just about bottlenecks in the process. But, it can also involve finding ways or solutions to make the
process more efficient and effective than before.

 Reengineering. This usually involves redesigning the entire process cycle instead of small improvements in some parts. Business
processes may become too complex and cumbersome because, for example, customer orders have increased dramatically. It makes the existing
process ineffective and inefficient in managing orders. For example, previously, companies might divide teams or functions based on customer
groups. Each team carries out the entire process, from handling orders to monitoring orders until they reach the customer. Management may find it
ineffective and efficient. Later, the company’s steering committee proposed to reengineer. Instead of each team handling the entire job, the new
process design divides each process into multiple work areas. Each team in each area handles the same tasks and jobs. It makes them more
specialized and more skilled.

Definition of Entrepreneurship Development

 Basically, entrepreneurship development is basically the process of improving the skill set as well as the knowledge of the entrepreneurs.
This can be done through various methods such as classroom sessions or training programmes specially designed to increase the
entrepreneurial acumen.
 Another definition of this term could be the process of enhancing the capacity to develop, manage and organize a business venture while
keeping in mind the risks associated with it.
 But instead of complicating things with big words and sophisticated terminologies, let us understand it simply. The process of
entrepreneurship development is nothing but helping the entrepreneurs develop their skills through training and application of that training.
It instils in them the quality of making better decisions in the day to day business activities.
 Now that we understand the meaning of entrepreneurship development, let’s discuss the process of entrepreneurship development.
 Entrepreneurship Development is a technique designed to enhance the entrepreneurial skills of professionals. It involves the inculcation,
refinement, and grooming of entrepreneurial skills within someone to establish and successfully run an enterprise.
 Many young people in developing countries need access to modern education on business development and the use of Information and
Communication Technologies (ICTs). This makes it hard for new entrepreneurs to compete successfully in the job market and contribute to
their country’s economic development.
 Entrepreneurship Development gives people the encouragement and business skills to help them establish a successful enterprise. It is all
about building a business from zero by developing new ideas and turning them into a profitable businesses.

PROCESS OF ENTREPRENEURSHIP DEVELOPMENT

Clear View of the Objective of the Program

 Before you get into training the prospective entrepreneurs, it is very important to have a clear objective and plan in mind about what the program
is going to encompass.
 Without a proper plan and direction, the training would not yield the desired results. This would lead to a loss of time, money, effort and most of
all, valuable potential.

Selecting the Potential Targets

 It is important to select the potential targets who are willing to enhance their skills and who can be identified as the people who have some
amount of business acumen. These can be further divided into two categories- the educated target audience and the uneducated target
audience.
 Educated audience refers to the target people who have a decent educational background and want to be entrepreneurs. These people have
the motivation to put their education to use by starting a venture and working for themselves.
 Uneducated audience refers to the people who are not as privileged as others in terms of education about the market and have the potential
to become entrepreneurs. These people are constantly looking for alternative ways to earn money and support their families. Therefore they
are highly motivated and, given the right training and direction, can prove to be exceptional entrepreneurs.

Identifying Local Talents and Markets

 The process of entrepreneurship development program can be seen as most effective and efficient when it is applied in the local markets and on
the local entrepreneurs who know about it. These people understand and absorb the knowledge way more quickly and can apply it in the current
scenario because of which the results of the program can be seen more quickly and effectively.

Choosing the Right Location

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  Programs can only be launched where support institutions and resources are available, but ideally, these programmes should be planned and
launched in the areas where most people are interested and willing to take advantages of these programmes so that this opportunity can be used
most effectively and there is no loss of resources.

Tying up with Institutions

 A lot of times these programmes involve tying up with various institutions like universities, NGO and some private institutions. This is done to
give a real-world experience to assist the program and give the people some idea of the situations in the real world.

Develop the Entrepreneurship Program as Needed

 People and their skill sets are different and develop over time. Thus, it is very important to keep developing the programs to suit the needs of the
people enrolled in it. Moreover, the focus must be on harnessing their strengths and working to minimize their weaknesses.

Analyze the Result for Future Development

 This is a very important and final step in the process of entrepreneurship development. After the program has run its course, it is very important
to analyze the effectiveness of the program. This is necessary to ensure that in future more effective programs can be developed. For this one has
to minimize the shortcomings of the existing program.

IMPORTANCE OF ENTREPRENEURSHIP DEVELOPMENT

Entrepreneurship is one of the drivers of the economy since it promotes productive development. Worldwide, all countries committed to progress
include entrepreneurship as a development factor.

Definition of Entrepreneurship – Entrepreneurship is the ability to identify and coordinate productive resources at the service of an innovative idea
to materialize a business. Entrepreneurial development promotes competition, variety, selection, cooperation, transformation, evolution, scientific
progress, and knowledge, among other positive factors for a country.

There are certain conditions to generate a favorable environment in which entrepreneurs thrive and succeed in society: economic freedom, a
guarantee of the right to property, policies, and regulations related to the subject, and education and training infrastructure, among others.

Although entrepreneurship is not the only solution for economic development, it is the key to rescuing, prosecuting, and accelerating a country’s
growth and economic development. All this process generates a cycle that translates into the following:

ENTREPRENEURSHIP = ECONOMIC DEVELOPMENT = MORE ENTREPRENEURSHIP

What are the Benefits of Entrepreneurship Development?

We have listed the main benefits of Entrepreneurship Development:

1. Drives Innovation and Creativity

 Innovation and creativity are essential for any economy to flourish and compete in the global marketplace.
 Giving people the tools and resources to start businesses allows economic innovation and creativity. This can lead to new products or
services that can improve consumers’ lives and make businesses more efficient.

2. Boosts Economic Growth

 Entrepreneurship is critical for economic growth. It leads to the developing of new products and services, stimulating investment,
increasing productivity, and driving competitiveness.
 A study by the Global Entrepreneurship Monitor found that countries with higher rates of entrepreneurship tend to have higher economic
growth rates.

3. Creates Jobs and Improves Wages

 In many cases, the entrepreneurial culture is a source of work for unemployed people, who can generate more money by producing their
ideas.
 Likewise, innovative ventures require new jobs with unique skills. These are entry-level jobs where new staff need to be trained and gain
experience. 
 On the other hand, many business ventures aim to supply innovative products and services that facilitate the work of large industries,
creating more jobs for people who want to offer their labor or specialized knowledge. 
 Finally, in terms of salaries, the importance of entrepreneurship lies in increasing the income of the people who create these new innovative
businesses.

4. Improves the Quality of Life

 Entrepreneurship is a source of development, be it economic, technological, or social. One of the most significant benefits of start-ups is
that they aim to improve people’s lives since they offer new possibilities through innovative products or services. 
 For example, large technology companies such as Apple, Facebook, YouTube, Google, and Microsoft were born as digital start-ups and
today help simplify many tasks of daily life. 
 On the other hand, social enterprises also improve the community’s quality of life and excellent stability. 

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And so that you can understand it, we will mention some of the benefits of undertaking at the community level: 

 Installation of new commercial premises. 

 Work to decrease the number of slums. 
 Establish better sanitation standards. 
 Achieve more significant investment in education and recreational activities.

5. Promotes Knowledge and Research

 The meaning of entrepreneurship is synonymous with innovation. Therefore, investment in research on science and technology is essential
for the development of ventures.  
 In other words, the more one knows about a subject; the more one will be able to master and take advantage of the skills necessary to
execute business ideas.
 On the other hand, to create any business venture, it is necessary to have at least a basic notion of how businesses work, as well as an
understanding of how a company’s structure, climate, and organizational culture work. 
 In conclusion, one of the essential benefits of entrepreneurship development is that it encourages the education of entrepreneurs and
investment in research. 

6. Increases Self-esteem and Confidence of Entrepreneur

 Beyond the economic benefits of a business venture, it is essential to take into account that, personally, it represents a better level of self-
esteem for the entrepreneur and a boost of confidence to achieve their goals. 
 On the other hand, it is also important to remember that personal ventures must be something their creator is passionate about and not only
see it with an economic advantage. 
 In this way, innovative entrepreneurship’s success will help recognize what it is capable of through effort and hard work, in addition to
becoming a source of well-being and a stimulant for the lives of the people who develop it. 

So, what is the objective of this benefit of entrepreneurship development? It inculcates and boosts psychological qualities, such as: 

 Self-confidence
 Self-esteem
 Self-efficacy
 Goal orientation

According to BBVA, “working on your ideas is positive for you, but also your clients since you will have greater interest and passion for what you
do.”

7. Contributes to a Country’s GDP

 Entrepreneurship significantly contributes to a country’s gross domestic product (GDP). A study by the Organization for Economic Co-
operation and Development found that entrepreneurship accounts for 3-4% of the GDP in the developing countries.

8. Job Satisfaction
 Although satisfaction is a feeling you can achieve in all jobs, nothing compares to what a person feels when they see their entrepreneurial
idea materialize. 
 A business venture requires a significant commitment to explore new ideas, work for hours, perfect your strategies and try to reach an
outcome that meets your initial expectations. Entrepreneurship development helps you set clear expectations for your work and plan the
tasks accordingly to achieve your goals.  

9. Improves Professional and Social Circle

 If you are in charge of what a venture is, you will be able to intervene in all stages of its development. That is, you will participate in the
planning, developing, and closing of the productive or social process. 
 So, having a very high level of influence, you will have to establish contact with other people outside the project who can later help with
new projects to complete each phase of the process. 
 For example, if you have a business venture to sell T-shirts, you may have contacts with textile companies, printing factories, and even
packaging design experts. 

10. Autonomy
 People with more autonomy in their jobs are more invested and involved. Because entrepreneurs are responsible for their businesses, they
have plenty of motivation to work hard to ensure their business succeeds. With your own business to manage, you have a sense of self-
governing and self-directing.
 We hope this article helped you understand why entrepreneurship development is crucial for any economy.

Entrepreneurship Development Process

Entrepreneurship development is the means of enhancing the knowledge and skill of entrepreneurs through several classroom coaching and
programs, and training. The main point of the development process is to strengthen and increase the number of entrepreneurs. 
This entrepreneur development process helps new firms or ventures get better in achieving their goals, improve business and the nation’s economy.
Another essential factor of this process is to improve the capacity to manage, develop, and build a business enterprise keeping in mind the risks
related to it.
 In simple words, the entrepreneurship development process is about supporting entrepreneurs to advance their skills with the help of training and
coaching classes. It encourages them to make better judgments and take a sensible decision for all business activities.

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The below-mentioned steps will illustrate how to build an effective entrepreneurship development program for an entrepreneur to organize and
launch the new ventures.

 Discover – Any new process begins with fresh ideas and objectives, wherein the entrepreneur recognizes and analyzes business
possibilities. The analyzing of opportunities is a risky task, and an entrepreneur looks out for inputs from other persons, including channel
partners, employees, technical people, consumers, etc. to reach an ideal business opportunity. 
 Evaluation – The evaluation of an opportunity can be done by asking several questions to oneself. For instance, questions like whether it is
worth taking a chance and investing in the idea, will it attract the consumer, what are the competitive advantages and the risk linked with it
are asked. A reasonable and sensible entrepreneur will also analyze his skills and whether it matches his entrepreneurial objectives or not.
 Developing a plan – After the identification of an opportunity, an entrepreneur has to build a complete business plan. It is the most
important step for new business as it sets a standard and the assessment criteria and sees if a company is working towards the set goals.
 Resources – The next step in the process of entrepreneurial development is resourcing. Here, the entrepreneur recognizes the source of
finance and from where the human resource can be managed. In this step, the entrepreneur also tries to find investors for his new business.
 Managing the company – After the hiring process and funds are raised now it’s time to start the operation to accomplish the desired goals.
All the entrepreneur will decide on the management structure that will be assigned to resolve the operational problems whenever it occurs.
 Harvesting – The last step in this process is harvesting, where an entrepreneur determines the future growth and development of the
business. Here, real-time development is compared with the projected growth, and then the business security or the extension is initiated
accordingly.

Difference between Businessman and Entrepreneur

A businessman walks on the defined path, but an entrepreneur believes in making his own path, which becomes a guideline for other businessmen.
Most of the people have a misconception that the terms businessman and entrepreneur, carry the same meaning, due to which they use them
interchangeably.

A businessman is a person who runs the business, undertaking an unoriginal business idea.  On the contrary, an entrepreneur is someone who first
initiates a product or business idea and thus the leader of that in the market.

In the long run, an entrepreneur becomes a businessman, but there is a difference. Even the terms will sound same for a layman, but there is a fine
line amidst the two, in the sense that an entrepreneur is always a market leader whereas a businessman is a market player. In this article, we will help
you learn the difference between businessman and entrepreneur.

Content: Businessman Vs Entrepreneur

1. Comparison Chart
2. Definition
3. Key Differences

Comparison Chart

BASIS FOR
BUSINESSMAN ENTREPRENEUR
COMPARISON

Meaning A businessman is someone who sets up a An entrepreneur is a person who starts an

business with an existing idea offering enterprise with a new idea or concept,
products and services to the customers. undertaking commercial activities.

Market Position Market Player Market Leader

Nature Calculative Intuitive

Market Creates place in existing markets Creates new market

Risk factor Less Comparatively high

Methods applied for Conventional Unconventional

doing things

Approach Holistic Atomistic

Orientation Profit People

Competition Very high Low

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Definition of Businessman

 A person who is engaged in carrying out any activity, related to commercial and industrial purposes is known as Businessman. He sets up
his business as a new entrant in the market as for the existing business. When it comes to originality of ideas, most of the businessmen go
for a business which is highly in demand or which can make huge profits for them irrespective of uniqueness.
 A businessman faces tough competition because there are hundreds of rivals already existing in the market undertaking the same business.
Although the risk factor is low because he walks on a path that is already tested by the rivals so the chances of failure are relatively low.
 The main objective of a businessman for conducting the economic activities is to generate revenue by employing the human, financial
and intellectual resources. By virtue of this, customers are treated as the king of business by the businessman.

Definition of Entrepreneur

 An entrepreneur is a person who conceives a unique idea or concept to start an enterprise and brings it into reality. He is the person
who bears risks and uncertainties of the business. The venture established by the entrepreneur is known as Startup Company, which is
formed for the very first time regarding the idea, innovation or business process.
 He/She is the ones who lead the market always no matter how many competitors will come later, but their position will remain untouched.
 In economics, the entrepreneur is considered as the most important factor of production, which assembles and mobilizes the other three
factors of production i.e. land, labor and capital. In the long run, these entrepreneurs become a businessman.
 Entrepreneurs are known for their creative approach. They introduce innovation and coordinate the resources. They offer such products and
services which bring about a change in the world.
 Some real life examples of such entrepreneurs are Bill Gates (founder of Microsoft), Mark Zuckerberg (co-founder of Facebook),
Larry Page (co-founder of Google), Steve Jobs (co-founder of Apple) etc.

Key Differences between Businessman and Entrepreneur

The following are the differences between businessman and entrepreneur

1. A person who brings his unique idea to run a startup company is known as an entrepreneur. A businessman is a person who starts a
business on an old concept or idea.
2. A businessman makes his place in the market with his efforts and dedication, whereas an entrepreneur creates the market for his own
business.
3. The businessman is a market player while Entrepreneur is a market leader because he is the first to start such a kind of enterprise.
4. The nature of a businessman is calculative, but an entrepreneur is intuitive.
5. As the businessman follows the footsteps of other businessmen, the possibility of failure is very less which is just opposite in the case of
the entrepreneur.
6. A businessman uses traditional methods to run the business. Conversely, an entrepreneur applies unconventional methods for the same.
7. A businessman is oriented towards profit, however, an entrepreneur is a people focused in essence, he gives more importance to its
employees, customers, and the public.
8. The businessman faces extreme competition because it is very difficult to gain a competitive position in an already existing market, which
is not in the case of an entrepreneur.

Difference between a Capitalist and an Entrepreneur

The difference between these two roles is best explained as the entrepreneur is the individual(s) who forms a new business or startup, does most of
the work, and takes the risk, where a capitalist, though also undertaking risk, is mainly the source of needed capital.

The entrepreneur is the person who owns the company, and the capitalist finances that company. The entrepreneur receives profits as a reward for
their work (and ideas), while the capitalist receives interest on the money they have provided. However, in some cases, the capitalist may request a
percentage of the business as equity. 

***End of the lesson**

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